How to lodge an income tax return for business in Australia

By Kaleem Ulah

June 3, 2024

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It doesn't matter what kind of business you have or how big it is—tax time is always a rush. You're in the best seat in the house if someone does your taxes for you. However, as a small business owner or entrepreneur, it can be hard to pay for that. Even if you can do it yourself, it's still a good idea to understand how your income tax works and how to do it quickly and correctly. In this post, we'll talk about the types of taxes you need to pay the ATO and how to file your reports.

Key Business Taxes in Australia

The Australian Taxation Office (ATO) is in charge of collecting taxes. The government of Australia spends the tax money on community services and building up the country. These are the main taxes that businesses have to pay:

Key Business Taxes in Australia

1. Goods and services tax

In Australia, GST is a sales tax on most goods and services, but some things are not taxed. The tax rate right now is 10%. If your sales reach certain levels, you must charge GST on your goods and services and collect it for the ATO. You can get GST credits for things you buy for your business that are normal for it to run.

2.Company tax 

Every business with an office in Australia has to pay company tax on its taxable income at rates set by the government. The tax rate might be slightly different depending on the type of business or field. In Australia, companies that don't live there have to pay the same business tax on income as those that do.

3. Capital gains tax

You're taxed on your gain when you sell an item for your business. The gain is the difference between how much you paid for it and how much you got. It's called a capital gain if the amount is positive. This is taxed and reported as part of income tax. In some cases, small businesses may get tax breaks on capital gains.

4. Pay-as-you-go (PAYG)

Pay As You Go (PAYG) is when you take money from your workers' salaries or wages to help them pay their taxes. It goes straight to the ATO. Read more on PAYG Explained: A Practical Guide to PAYG Instalments for Tax.

5. Wages tax

You must pay the state tax on your employees' monthly wages if they make more than a certain amount. The rate and the thresholds are different in each state.

6. Other charges

If your business is different and your situation calls for it, you may also have to pay the following fees:

  • Tax on wine equalisation
  • High-end car tax
  • Tax on extra perks
  • Tax on land

Step-By-Step Guide to Filing a Business Tax

1. Find out what tax return your business needs

Your business must file a yearly tax report even if you lose money or don't pay enough tax. Ensure you know the rules that apply to your business arrangement before you file your return: 

Step-By-Step Guide to Filing a Business Tax
  • Sole trader: As a sole trader, you must file your tax report. Use a different business schedule to list your income on your tax return. You don't need to send in a separate business tax report.
  • Partnership: Your partnership has its tax file number (TFN), but the money it makes is not taxed as income. On their tax return, each partner lists the amount of money they made from the company. Also, your partnership must file its tax report with its own TFN.
  • Company: There is a company tax return that you need to file and tax that cash. Even if you're a director, you must file your tax report.
  • Trust: A trust has its tax identification number (TIN) and needs to file a trust income tax report.

2. Go over your business activity statements

Any company that has signed up for an Australian business number (ABN) and goods and services tax (GST) will get BAS and GST automatically from the ATO. They file their BAS every three months to report and pay their GST, pay-as-you-go (PAYG) payments, PAYG deductions, and other taxes. When you file your company tax return, you'll need the details on your BAS. So, checking it for mistakes is important before you file it. You can also fix mistakes in BAS or make changes as needed. Read more on Business Activity Statement(BAS) For Small Businesses Explained: A Full Guide.

3. Get together the right document

To file your taxes, you might need more than one type of business record, such as

  • Bills for things bought
  • Forms to fill out for any sales that result in capital gains tax
  • Income records for inactive income
  • Proof of any interest you've earned
  • Payroll records for employees
  • Statements for any share of stock or payments made from a trust.

The ATO says that businesses must keep records for five years from the date they file their tax return. Because of this, it's very important to have a strong method for keeping records.

4. Choose a way to lodge

There are three main ways to file your tax return:

01. Online

There is online software that meets Standard Business Reporting requirements that you can use to file taxes for a business, like a trust or company. The SBR is a set of rules for how to tax businesses. Many cloud-based software companies in Australia have added an SBR-compliant feature to their services. You can then join in and finish your tax return right away. You'll need to make a machine credential to talk to government bodies like the ATO through an on-premise tool. 

02. Tax preparer

You can hire a qualified tax agent to help you with your taxes, whether for you or your business. In this case, you'll allow your provider to do the process for you. Since tax agents won't double-check the validity of your paperwork, it's up to you to give them accurate information. They will review your financial documents, tell you how much you owe the ATO, and file your return. Tax professionals are part of a special programme that lets them file their clients' tax returns after the normal deadline of October 31. But you need to contact your agent early to ensure they have time to handle your return. Check if your tax preparer is licensed with the Tax Practitioners Board (TPB).  

03. Paper

You can print out the individual tax return form out, fill it out, and mail it to the ATO in the capital city of your state if you'd rather do things the old-fashioned way. There is an extra part to your tax return that you'll need if you have income from rents, capital gains, partnerships, or foreign sources. There is another type of tax return you must file if you have income from personal services (PSI), business profits and losses, or any non-commercial company losses. This is called the business and professional items schedule. The only place to get these two forms is online, and you can use the ATO release order service to get them. You can also get help with your tax forms by calling the ATO. Your tax return could be worked on for up to 50 days.  

5. File your tax return by the due date

Again, the due date for business tax forms depends on how your business is set up:

  • Sole proprietorship

Your tax return is due every year by October 31 if you file through myTax. It might be possible to file your taxes until May of the following year if you use a registered tax agency. On October 31, you must have registered with an agent. Your agent can tell you when you need to file your return.

  • Partnership

You have until October 31 to file the partnership tax return if you decide to do it yourself. A registered tax agent will tell you when to lodge if you use their services.

  • Trusts

If you do it yourself, the trust tax report must be turned in by October 31. A registered tax agent will tell you when to lodge if you use their services.

  • Business Companies

Different dates apply for when you have to file your company tax reports. The deadline for most people is February 28, but you can check the ATO website for more. The due date goes back to October 31, though, if you still owe money for taxes from past years. Your tax agent will tell you when to file if you do it through them. You can also check out How To Avoid Getting A Tax Audit by The ATO.

Steps to filing a business tax online

  1. Go to Enrol Services to create an account if you don't already have one, then log in to your MYGOV account.
  2. You must connect your MYGOV account to the Australian Tax Office (ATO) after creating it. After connecting your account, return to MYGOV and navigate to MYTAX. Complete the Contact Information and Financial Institution Information sections. You could find these two parts partially pre-filled because they relate to banking institutions and social and governmental services.
  3. Proceed to the third segment, customise your return. You will then select your business structure from here. Click the box labelled "Business/sole trader, partnership, and trust income (including losses)."
  4. The box will be checked, and a tool link will show up. By clicking this link, you may access the Personal Services Income tool, which can assist you in determining whether or not you are subject to the Personal Services Income regulations.
  5. The "Business income or loss" will appear to be checked automatically.
  6. MyTax will automatically prefill your tax return based on your option once you proceed to the next step.
  7. Subsequently, you will be required to provide your business information, such as your firm address and activity. To proceed to the next section, click save.
  8. Enter your revenue as a sole proprietor after selecting your business category.
  9. Subsequently, you will be required to input your sole trader costs in the expenses area (the "All other expenses" field will contain the costs for your phone, laptop, and IT). Use the Depreciation and Capital Allowance Tool if you have any capital allowance claims or depreciating assets.
  10. MyTax will compute your net income or loss from non-primary output.
  11. You'll be prompted to use the Business Income Offset calculator to see whether you qualify for the small business tax deduction (which, as a sole proprietor, you most likely do).  
  12. Upon selecting "save and proceed," a series of procedures will guide you through to file your tax return.

What Happens After Filing Your Business Tax Return

After that, what happens? After you file your business tax return online, it should take two weeks to get your assessment letter. If you've made more than the tax-free for 2024, you will owe taxes, and the ATO will tell you how much. Make sure you have enough money saved to pay your income tax. The PAYG instalments tool can help determine how much you'll need to pay each quarter. The last day to send in your tax return is October 31.

If your first tax return exceeds the tax-free amount, you will automatically be put into the Pay-As-You-Go (PAYG) system. You will have to pay tax every three months using this method. You will get an email from the ATO telling you how to pay your tax. These days, you have 28 days to pay after the end of the quarter. You can use a bank card, credit card, or BPAY® to pay.

Conclusion

It doesn't have to be stressful to file your taxes. If you have more than one source of income, calling a licensed tax agent is the fastest and easiest way to file your return. But to avoid getting a tax bill, ensure all of your papers are in order. It's easier to do it yourself online if you have a full-time job. Your tax return will be easy to fill out as long as your TFN and super funds are linked to your myGov account. The Kalculators will always be available to help with your business tax return. We take over the strenuous process and ensure your deductions are worthwhile. Do not make costly mistakes with your business tax return; reach out to us today to get you started.

Frequently Asked Questions

Do I need to sign up for GST (Goods and Services Tax)?

Your business only needs to sign up for GST if it makes more than $75,000. If you make more than that amount, you need to include GST on your next bill and sign up for it as well.  

Do I need to file a Business Activity Statement?

When you register your Australian Business Number (ABN) or GST, you'll immediately get your BAS. As a small sole trader, you need to fill out a BAS every three months to report any GST you've received from customers or paid to businesses for purchases. This form also helps you pay your PAYG instalments.

What will happen if I miss the due date?

When is the tax return due? If you forget, you have to file it as soon as possible. In addition, you shouldn't wait any longer if you think your tax return will lead to a tax bill. Even if the payment is lodged late, the due date for completion is November 21, 2024. It might be hard for you to pay before or on November 21. If that does happen, you can look at these payment plans:

  • Making an online payment for less than $100,000
  • Phone service that is automated for less than $100,000
  • If you owe more than $100,000, you need to talk to the ATO about how to pay it off.

As a sole proprietor, should I fill out my tax return?

It depends on your return and how hard it is to understand. If you would rather not handle your finances and office work and have more than one source of income, it might be best to hire an accountant. An accountant will also help you make sure you haven't missed anything if you have big, expensive investments, pieces of land, buildings, workers, or tools. If you've been keeping careful records of your pay and your accounts are pretty simple, you might be better off doing it yourself.

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About the Author / By Kaleem Ulah

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Kaleem is CEO & Author at "The Kalculators". With more than 10 years of experience in financial services, He built Kalculators to transform your financial challenges into strategic triumphs!

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